Where are we going wrong economically?

[Threebear]

Young family (35f + 37m + 1 child 4y), living in an expensive European country. Income is 4700€ net per month + any income from a newly formed business (many months of 300€, occasional months of 2000-3000€). Averaging at 5500€/month over a year although there is no guarantee, the only guarantee is our 4700€ income.

Living costs per month (many of these clearly go up and down by month ergo holidays / presents / expenses, but overall the averages over 12 month periods are as so :

HOUSING:
1600€ mortgage
300€ community fees (bloody expensive we’re aware but nothing to be done)
300€ heating, water, phone, electric, Netflix and Disney tv

FOOD:
700€ food supermarkets
150€ eating out
100€ alcohol, drinks in bars etc

CARS:
100€ petrol
250€ insurance and mechanic work etc for 3 vehicles (2 oldish cash bought cars + 1 old Campervan)

EXTRAS per month average:

100€ food and vet bills for 2 large dogs

150€ presents (Christmas and birthdays)

500€ holidays (1 big 3 week trip to tropics + 2-4 weeks camping in own camper)

150€ healthcare (this isn’t private, this is dental and therapy and medications)

300€ purchases (including everything and more : business fees, parking, clothes, local passes, parking or speeding fines etc.)

200€ kid expenditure including holiday clubs for 6 weeks a year approx.

TOTAL = 4900€

As I hope is clear I keep a very detailed excel of our expenses. We are living day to day and we cannot see where we can cut costs easily which may sound laughable but allow me to explain..

Our holiday expenditure seems high clearly, however it is our 1 desire, not wait until retirement to enjoy our life and see the world. We love to travel, we love our Campervan, and we absolutely love that we can take many weeks a year with our child while he’s young to show him the world whether camping in southern Europe cheaply or travelling further afield (trying to be cheap in places like India or Thailand but always ends up over budget as though we’ve been vacationing in the USA which we do not ).

Bar this I cannot actually see where and what we could cut. For that reason I wondered if it might be useful to hear from other people/families in similar salary ranges, to know their expenditure and where they have managed to cut corners during times of inflation.

In reality our home costs us a huge amount but it is a dream. It needs a full redo and we don’t have a penny to spare to do so but the purchase was necessary and never in a million years would we give it up. It’s only 120m2 with small outdoor space but as I mention it’s an expensive country. Moving countries isn’t an option at all although we have considered it time and time again. Finding this quality of life is hard to come by.

We have 3 vehicles. The camper is clearly not necessary but sadly the 2 cars are for business / work and hobby reasons. If we give up the camper we save maybe 1000€ a year but no doubt would quickly swallow that back in extra holiday expenses. The Campervan over time is cost friendly and so worth it. Our vehicles are all cash bought, but they’re all getting old and due to climate we live in get older quicker. We cannot afford to get newer vehicles.

We purchase the most basic of clothes for ourselves once holes appear in the used ones. We buy presents that are useful ergo to avoid expenditure over year (bike for birthday, skis for Christmas, winter jacket as main present for each other etc etc).

The reality is we need minimum 1000€ to save/invest at this point in our lives. If business goes well then great but if it doesn’t I am terrified to find myself mid forties with nothing but a lovely home to show for it.

Luckily retirement is settled for us as both come from families that did ok during the 80s and 90s meaning we will inherit more than enough to retire at 65 comfortably. Previous to this our existence is just month to month however and we do not trust the world economy or politics now to be ok without our own savings being built monthly.

Many thanks for any comments on how you would personally cut expenditure on this budget.

It’s the holidays and presents, you could cut back on them and have more spare money or carry on as you are. €1800 per year is a lot to spend on presents.

You can also travel for less than €6,000 a year, especially in a camper.

Would anyone go halves with you on the camper? Trusted family/friends? Use it half the year each, share the costs

Your vehicle costs will go up as they get older. The holidays are a huge chunk out of the money. But if these are non negotiable then you'll keep spending whatever advice you get here.

Personally I think you are relying on inheritance and therefore are looking for short term changes (which you don't want to make anyway) rather than lifestyle which you would do if you had no inheritance forthcoming.

I think you’re living pretty well for your budget!

It's not for me but a friend does house swaps for holidays. She had a week in London while another family was in her house, it saves them a lot. Through a website with some protection / insurance. With some of them you also swap cars, saving on car rental

You would need to break this out and also give the country if you want detailed feedback:
300€ heating, water, phone, electric, Netflix and Disney tv

I thought the bills sounded low.

Speeding and parking fines? Why not drive at the speed limit and park responsibly? Why are you spending €150 at the pub every month?

We have a similar income but 3 children so i feel like we have to live really frugally just to meet the bills. We rent and that is 400€ less than your mortgage. There's no way we could afford to spend what you do on holidays. We do a few camping trips a year within a few hours drive of home. We also rarely eat out , only for a special occasion like a birthday. We also spend far less than you on presents. I would love a pet but we cannot afford the food and vet bills so decided not to get one. I think if you're managing to do these holidays, presents and eating out then you're doing ok. They seem like the obvious things to cut, but if they're non negotiable for you then you're going to have to accept there is nothing left over.

Well, you list all your non-necessary expenditure and then have a reason for each of them why you don’t want to give it up. Three vehicles, frequent travel, skiing and a nice (and relatively big) apartment is a high standard of living by anybody’s standards.

Personally I would cut down on the travel and sell the campervan. “Showing the world” to a four year old makes no sense. He won’t understand or remember any of it. He’ll be just as excited to be shown the local park. Stop the travel for a few years and resume once you’ve built up some savings and your son is old enough to appreciate it.

there’s plenty that can be cut and reduced in that budget!! PLENTY!!

I would try to swap to 2 vehicles, something really cheap to run and a day van type camper that you can use both for holidays and as a daily driver.
If you get a standalone awning or big tent with a flat side it can work really well.
You can likely rent a storage space for all your camping kit and the heavier parts of the van fit out, for much less than the cost of running a 3rd vehicle.

You could cut out alcohol?

Or stop speeding?

€6k seems a lot to spend on holidays for 2A and 1C (especially if your camper van takes out flights and accommodation) and 6-7 weeks seems a lot of time to be spending travelling. Have you no childcare costs?

It’s not clear of both parents work, but if you’ve no childcare cost, I’m assuming one, and a side hustle making up the infrequent second income.

Thanks for all this, it’s really helpful hearing this all even the slightly judgy comments. The reality is my holidays and I know it and have to accept it. I don’t speed for the sake of speeding, I’m talking about a 55€ fine once in 3 years, and 1 other parking ticket, I was just explaining that it really included everything possible extra. No childcare costs, school starts young here and is free. We don’t go on date nights so no babysitter ever. Holiday camps are necessary but only cost 100-150€/week as heavily subsidized here. One full time freelancer working and me the new business owner, not side hussle, actual business but depends on client uptake I may work 30 hours one week and have an entire month of no work after. This is a work in progress of course and hope to settle at an average of 20hr/week work. We travel so much during to the free schedule I have and the fact partner works online.

You are probably absolutely right. It’s not a necessity rather a want so the lack of desperation means I find excuses continuously to go on the holidays or keep the 3 vehicles etc knowing that one day it will all be fine anyway.

120€/month heating for 5-6 months a year (diesel), 100€ water, 80€ 2 mobiles and home internet, 55€ electric, 20€ tv

Why so much on presents?

Great idea!! Something I’ve considered in past and will def. Reconsider for next year!

250€ a month on alcohol and eating out - could cut that straight to zero for a very easy way to reduce expenditure.

Example budget this year just for Christmas:

390€ bike (my kid goes to a professional bike training camp so needs a bike necessary for such) + 100€ toys / books / clothes. 150€ for 5 family members abroad (30€pp) + 100€ budget each for a present to each other (ebook for him and winter jacket for me). Birthdays are a much smaller affair but add up quickly when you spend 100€ per person (I buy presents for 2 children external family and for my own child and partner only - none for external family)

Instead of justifying all the non-essential spending, why not try a different approach?
For 3 months you will spend nothing on drinks/eating out for example. You will reduce the supermarket monthly spend by 10%. And so on.
There is definitely a lot you can shave off with the aim of reducing monthly spending by between 500-1000.
If you set yourself a short time frame, then you won't feel like you are suffering. Look at it as an experiment.
It might become a habit. Everything you save goes towards a pot of money for house renovations.
You could definitely reduce the holiday budget. And divert this towards home renovations.
Hopefully your business will become profitable and steady within 2-3 years.
At that point you could live well again perhaps.

Are you actually going wrong though and if you are then it’s pretty easy to see there are areas you can cut back on?

Great idea, thank you!